Move the world with one move Analysis found that Nvidia is the most critical stock affecting the global stock market
According to an analysis by DataTrek Research, NVIDIA has emerged as the most influential company in the global stock market, despite not being the largest corporation worldwide.
On Tuesday, NVIDIA’s stock plummeted by 4.7%, driven down by disappointing earnings reports from semiconductor giant ASML. Given NVIDIA’s 6.84% weighting in the S&P 500, DataTrek estimates that this decline accounted for 42% of the S&P 500’s overall drop that day.
Nicholas Colas, co-founder of DataTrek, noted that while many believe stock price volatility is inversely related to market capitalization, this isn’t the case for NVIDIA. The AI chip powerhouse boasts a market value of $3.26 trillion, making it the second-largest company globally, trailing only Apple at $3.51 trillion. Yet, NVIDIA’s stock is known for its significant price fluctuations.
NVIDIA’s influence is felt beyond U.S. shores; it represents 4.3% of the MSCI ACWI index, surpassing all countries except for the U.S. at 64.8% and Japan at 4.9%. The combined weighting of France and Germany is only 4.4%, roughly equivalent to NVIDIA alone.
Colas emphasizes that for global equity investors, NVIDIA has effectively become the most critical company. While investors may prioritize country allocation, the decision to increase or decrease holdings in NVIDIA could easily outweigh considerations related to national allocation.
